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Attorney Explains What Happens When Two People Own A Car Jointly And One Of Them Files Bankruptcy in NJ

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What happens if a person, who does not file for bankruptcy, jointly owns an automobile with a person who has filed for bankruptcy (debtor). The law is the same no matter the relationship between the filing (debtor) and non bankruptcy filing person (ie, friend, son, spouse).
In virtually every case, the debtor is permitted to keep his auto, from the sale of the trustee. Therefore, for this blog, we will assume that the auto does not have substantial value, and the debtor is permitted to keep the auto.
The state law, and not the bankruptcy law, applies to the non filing joint owner. This means that if the payments are current, the non filing person would be able to keep the auto, as if no bankruptcy was filed. The right of the non filing owner to keep the auto will not change no matter what information the debtor provided on his petition, with the exception of fraud. Also, the bankruptcy filing would not modify any terms of the financing.
As long as the payments are made on a timely basis, by any means, the finance company could not repossess the auto. Conversely, if the auto payments come into default after completion of the case and discharge, the finance company can always repossess the auto.
Also, if all required finance payments are made, by any means, or by any person, both individuals would own the auto jointly, after completion of all payments. Per state law, if the the auto payments are in default, the finance company could repossess the auto, sell the auto, and sue the non-filing individual for the deficiency that is due.
No information stated above would change the law relating to the non filing person, whether or not the debtor signed a reaffirmation agreement. However, if the debtor signed a reaffirmation agreement, and the payments fell in default, the finance company would be permitted to repossess the auto and sue both the debtor and non filing individual, for the balance due after auction. If the payments are in default, after the completion of the case and the debtor did not reaffirm the debt, the finance company would not be permitted to sue the debtor, as the debt would have been discharged.
Robert Manchel is an experienced New Jersey bankruptcy practitioner and will answer your questions by calling (866) 503-5655.

8. Objection of a New Jersey Chapter 7 Discharge

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Prior Chapter 7 Discharge
A debtor is not entitled to a chapter 7 discharge, if he has received a chapter 7 discharge of a prior chapter 7 case that was filed less than 8 years before the filing of the subsequent case. The time is measured from the date on which the prior case was filed with court to the date of the filing of the subsequent case, and not the discharge date of the prior case.
A debtor is not entitled to a chapter 7 discharge if the debtor received a chapter 13 discharge within 6 years, from the filing of the prior chapter 13 case.  In other words, to obtain a discharge, the subsequent chapter 7 must have been filed 6 years after the filing of the prior chapter 13 case. However, the exception to the six year time period rule is applicable if the following criteria was met in the prior chapter 13 case:
1. the debtor paid 100% of the allowed unsecured claims; or
2. the debtor paid 70% of the allowed unsecured claims, the debtor’s plan was proposed in good faith, and the debtor applied his best effort to pay the unsecured debt.
Robert Manchel, a NJ bankruptcy attorney, can be contacted at 1 (866) 503-5655 to discuss your options for bankruptcy protection.

1. Objection of a New Jersey Chapter 7 Bankruptcy Discharge

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This is one of a twelve blog series explaining how a chapter 7 debtor may be denied a discharge.
Under certain circumstances a debtor may be denied a discharge. The bankruptcy code states numerous reasons why a debtor may be denied a chapter 7 discharge.
A bankruptcy discharge, eliminates all types of debt that may be discharged in a bankruptcy case, such as credit card debt, medical bills, and other unsecured debt.
Any living person filing a bankruptcy case, that is entitled to a discharge, is able to obtain a discharge. However, if the entity filing the bankruptcy case is not a living individual, the entity is not entitled to a discharge.  In other words, a corporation, limited liability company, or partnership that files for chapter 7 bankruptcy protection is not entitled to a discharge. If such an entity files a bankruptcy case, the trustee will administer the case, which may include the sale of assets. After the case is fully administered, the case is closed, with no entry of a discharge order.
After completion of the case administration, there is nothing left of the entity. Even though a creditor may legally sue the entity after the completion of the case, the suit would be futile, as the entity is worthless.
New Jersey bankruptcy attorney Robert Manchel may be reached at 1 (866) 503-5655, to discuss your chapter 7 bankruptcy issues.

NJ Bankruptcy Attorney Discusses Health Care Debt In Bankruptcy

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Health care debt is classified as unsecured debt and is treated the same as credit card debt in all bankruptcy chapters.
If the debtor meets all criteria for a chapter 7 and is entitled to a discharge, all of the health care debt will be discharged and eliminated in the chapter 7.
Health Care Debt in a Chapter 13
All unsecured debt is paid the same as all other unsecured debt. All unsecured debt must be treated the same. The court adds all unsecured debt, together, including credit card debt, health care debt, and any other unsecured debt.  Then, the court looks at the following three criteria to determine the amount that must be paid towards all of the unsecured debt:
1. Unexempt real estate or personal property values;
2. Amount of disposable monthly income, pursuant to the Means Test or Current Monthly Income Test;
3. Amount of monthly disposable income, pursuant to the debtor’s projected future average disposable income, after deducting reasonable and necessary monthly expenses from net income.
In general, the easiest explanation as to the amount that must be paid towards health care debt in a chapter 13 is as follows: Usually the debtor pays only the amount he is able to pay on monthly basis during the life of the bankruptcy plan, based on his disposable household income.
The unsecured debt is paid pro rata. This means that each month the trustee will disburse a portion of the funds due to each unsecured creditor, based on the debtor’s disposable income and his ability to pay. When the plan is paid and completed, the balance that is due to each unsecured creditor, including each health care debt, is eliminated and discharged. Typically, if the debtor does not have sufficient disposable income to pay any amount towards the unsecured debt, the entire amount due to the unsecured creditors is eliminated and discharged.
Although unusual, if the debtor owns real estate or personal property, with a substantial value, the debtor is required to pay an additional amount towards the unsecured debt, which includes health care debt.
The debtor may be required to pay all unsecured debt, if he owns property having a substantial value, and/or has sufficient disposable income to pay all of the unsecured debt.
Robert Manchel, a bankruptcy lawyer in NJ, can be contacted at 1 (866) 503-5655, to discuss your bankruptcy protection questions and concerns.
 

New Jersey Bankruptcy Lawyer Explains When A Debtor Is Entitled to Their Auto Title

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In general, when a person satisfies the total amount that must be paid on auto financing, the finance company must transfer the title to the borrower. The same general law applies to auto financing, in connection with a bankruptcy debtor.
A chapter 13 debtor has different options in making auto finance payments.
A  debtor may make monthly finance payments directly to the finance company.  At the time the auto finance company has received full payment, satisfying the debt, the finance company must transfer title to the debtor, even though the bankruptcy case is not completed.
The debtor may pay the prefiling arrears through the chapter 13 bankruptcy plan, while paying the future regular monthly payments directly to the finance company.  The finance company must deliver the title, after the trustee has paid the total arrears, and the debtor has satisfied the balance that is due on the financing.
The debtor may pay the auto company, by way of a cram down. This means that the finance company is paid only the value of the auto, plus a fair rate of interest, through the bankruptcy plan. The difference that is owed, between the value of the auto and the total balance due, is discharged. Under this scenario, the entire amount is not paid to the finance company. Therefore, the finance company need not transfer title until the chapter 13 case is completed and discharged.
If the total balance due to the finance company is paid through the chapter 13 bankruptcy case, the finance company must transfer title, after the trustee has paid the total amount that is due to the finance company, even though the plan has not yet been completed.
New Jersey Bankruptcy Lawyer, Robert Manchel, can be contacted  at 1 (866) 503-5655, to discuss your bankruptcy questions.

Income Taxes In Bankruptcy – Explained By a NJ Bankruptcy Attorney

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Income Taxes in Bankruptcy
This is a very short and limited explanation of how income taxes are dealt with in bankruptcy. There are numerous exceptions and variations of the law.
The bankruptcy laws pertaining to state and federal income taxes are basically the same. Income taxes may be classified as priority debt, unsecured or secured. Depending on the circumstances, it may be possible for a portion of the income tax debt to be classified as secured and/or unsecured and/or priority. The income taxes are analyzed separately for each year. Please note that taxes are typically due on April 15th of the following year, unless an extension applies.
A very limited explanation of how to determine the classification of each years income tax liability is as follows.
A Credit card debt is an unsecured debt. Income taxes are deemed classified as unsecured, like credit card debt, if all of the criteria are met:

  1. A particular year’s income tax return was due more than  3 years prior to the bankruptcy filing;
  2. The returns for such year was filed more than  2 years prior to the bankruptcy filing;
  3. The income taxes for such year was assessed more than 240 days prior to the bankruptcy filing;
  4. No tax lien was filed for such year.

Income taxes are deemed classified as priority if any of the following criteria are met:

  1. a particular year’s income tax return was due less than  3 years prior to the bankruptcy filing;
  2. The returns for such year was filed less than  2 years prior to the bankruptcy filing;
  3. The income taxes for such year was assessed less than 240 days prior to the bankruptcy filing;

Income taxes are deemed classified as secured under any scenario, if the taxing authority filed a tax lien against the debtor.
The portion of the tax that is classified as unsecured is dischargeable and eliminated in a chapter 7.  However, depending on the debtor’s financial situation, a chapter 13 may possibly permit the debtor to discharge or eliminate some or all of  his unsecured income tax debt. Any income tax unsecured debt that is not paid in the chapter 13 is discharged and eliminated.
Priority income taxes can never be discharged or eliminated in a chapter 7 or chapter 13. This means that a chapter 7 discharge will not eliminate any portion of priority income taxes, which continue to be due and owing. Any priority income taxes due at the time of the chapter 13 filing, must be paid through the chapter 13 plan.
The following relates to an income tax liability that is classified as secured. With regard to a secured claim in a chapter 7, the taxing authority will be permitted to keep their secured lien against the debtors’ personal and real property, after the discharge. In a chapter 13, the debtor must pay the amount of the taxing authorities’ secured interest amount through the plan. However, the debtor may reduce the amount of the secured interest to the value of the debtor’s real and personal property, at the time of the filing.
Expert bankruptcy attorney in New Jersey, Robert Manchel,  can be reached at 1 (866) 503-5655 to discuss your tax issues and questions about seeking bankruptcy protection.
 
 
 

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